''Crews are working to protect those properties where possible.''
An employee of the Lake Hawea Hotel said the fire appeared to have started by the roadside near Capell Ave, the turn-off into Lake Hawea by State Highway 6.
''With the wind, it's just gathered speed.''
There were individual trees with rings of fire around them, and the houses were possibly in danger.
''I would definitely say that,'' she said.
The fire could be seen from the hotel at the time.
The road was closed, and the fire was moving up the hill.
''The smoke's gone from white to black.
''It's just gathering momentum.''
The NZ Transport Agency said SH6 has been closed at the intersection with Capell Ave as firefighters tackle the blaze and it advised motorists to avoid the area.
The fire temporarily forced the closure of State Highway 6 and caused around 10 home occupants to leave the impacted area, the Queenstown lakes District Council said.
"All local residents were evacuated at an early stage," Bobby Lamont, Deputy Principal Rural Fire Officer for Central Otago said.
A stop-go is in operation on a short one-lane stretch between Lake Hawea Holiday Camp and Capell Avenue - the access to Lakw Hawea township.
Around 5-10 hectares of pine forest on the affected slopes of Mount maude to the south-west of Lake Hawea township.
One crew will reamin in standby overnight and it is anticipated they will be relieved by three FENZ crews and two helicopters around 7am tomorrow.